Fri, Jul 17, 2009 - Page 8 News List

Economic costs of unwise decisions

By Bert Lim 林建山

The Mass Rapid Transit system’s (MRT) Neihu and Muzha lines were completely suspended following a system failure last Friday. This incident has highlighted not only a problem with the MRT system, but more importantly, the fact that the government’s decisions on infrastructure investment are often unwise and have an adverse impact on the nation.

The source of the MRT malfunction is the problematic system integration of the Muzha Line and the newly opened Neihu Line — the first MRT system in the world that combines two different operating systems. The two lines were completed 13 years apart. Theoretically speaking, this case required a “smart settlement.”

A so-called smart settlement must be built on an effective understanding of the direction in which a situation is changing and of future requirements. It must be market-oriented rather than manufacturing-oriented. In a rapid, diverse and changing knowledge-based economy, such a concept is especially important.

The system integration of the Muzha and Neihu lines is an example of an unwise decision by the Taipei City Government. The experience in advanced countries shows that similar cases have been settled by replacing the old system with a new one. Taipei, however, did the exact opposite. That was because the city’s decision-makers are stuck in a manufacturing-oriented mindset. Moreover, to keep costs at a minimum and because of a limited budget, they chose to integrate new and old systems.

The government should have made the decision based on the direction of district development in Taipei and the growth of future market demand. The resident and mobile population of Neihu District is double that of Muzha. In addition, the Neihu Technology Park, the Nangang Software Park and the Nangang Exhibition Hall combined will attract more people than the Maokong Gondola and Taipei City Zoo. Thus the Neihu Line should have been a high-capacity system. Instead, Taipei chose to accommodate the medium-capacity system of the Muzha Line.

In the long run, the Muzha and Neihu lines will connect to the Banqiao/Nangang (blue) Line, the Xinyi/Tamsui (red) Line, the Songshan/Xindian (green) Line and the proposed Minsheng-Xizhi Line. When these lines are completed, the Neihu Line will have to deal with even higher passenger volume.

The malfunction of the Muzha and Neihu lines serves as a warning for what is to come. It mirrors the fact that many of the government’s infrastructure projects suffer from a frugality and willingness to cut corners that belong to a past era fraught with economic problems, as well as short-term populist thinking and booty-sharing. The unwise decisions these attitudes lead to are everywhere to be seen, and the catastrophic costs that will result from these decisions will haunt us forever.

Bert Lim is president of the World Economic Society.


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